ACIT, CHENNAI V. Chettinad Logistics Pvt. Ltd., CHENNAI

ITA 946/CHNY/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8889 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 03-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 10-05-2013
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYA
• Assessee Lawyers: S SRIDHAR
• Keywords: Depreciation; Speculation loss; Reason to believe
• Section: 14A; 43(5); 10B; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NOS.1490/MDS/2012, 813 & 632/MDS/2013 / ASSESSMENT YEARS : 2008-09, 2008-09 & 2009-10 M/S CHETTINAD LOGISTICS P. LTD RANI SEETHAI HALL, 5 TH FLOOR 603, ANNA NAGAR, CHENNAI VS. THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE I(3) CHENNAI [PAN AABCC 4551 C ] ( &' / APPELLANT) ( ()&' /RESPONDENT) ./ I.T.A.NOS.1495/MDS/2012 & 946/MDS/2013 / ASSESSMENT YEARS : 2008-09 & 2009-10 THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE I(3) CHENNAI VS. M/S CHETTINAD LOGISTICS P. LTD RANI SEETHAI HALL, 5 TH FLOOR 603, ANNA NAGAR, CHENNAI ( &' / APPELLANT) ( ()&' /RESPONDENT) ASSESSEE BY : SHRI S. SRIDHAR, ADVOCATE DEPARTMENT BY : SHRI PATHLAVATH PEERYA, CIT / DATE OF HEARING : 11 - 04 - 2016 / DATE OF PRONOUNCEMENT : 01 - 07 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER BOTH THE ASSESSEE AND REVENUE FILED APPEALS FOR ASSESSMENT YEARS 2008-09 AND 2009-10 AGAINST THE RESPECTIVE OR DERS OF THE ITA NO. 1490/12 ETC :- 2 -: COMMISSIONER OF INCOME-TAX (APPEALS), CHENNAI. THE ASSESSEE HAS ALSO FILED AN APPEAL AGAINST THE ORDER OF THE ADMIN ISTRATIVE COMMISSIONER PASSED U/S 263 OF THE ACT FOR THE ASS ESSMENT YEAR 2008-09. 2. LET US FIRST TAKE UP ASSESSEES APPEAL FOR ASSESS MENT YEAR 2009-10 IN I.T.A.NO.632/MDS/2013. 3. THE FIRST GROUND OF APPEAL IS WITH REGARD TO DISALL OWANCE OF ` 11,08,832/- U/S 14A OF THE ACT. 4. SHRI S. SRIDHAR, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ASSESSEE HAS INVESTED A SUM OF ` 3,17,60,644/- IN THE SISTER CONCERNS. A PART OF THE AMOUNT WAS ALSO USED FROM INTEREST BEARING LOAN. THEREFORE, THE ASSESSING OFFICER, BY PLACING RELIANCE ON THE JUDGMENT OF THE DELHI BENCH OF THIS TRIBUNAL IN THE CASE OF ESCORTS LTD VS ACIT, 102 TTJ 522, MADE DISALLOWANCE OF ` 11,08,832/-. ACCORDING TO THE LD. COUNSEL, SEC. 14A OF THE ACT HAS NO APPL ICATION IN THIS CASE SINCE NO SATISFACTION WAS RECORDED BY THE ASSESSING OFFICER. IN THE ABSENCE OF ANY SATISFACTION RECORDED BY THE ASSESSI NG OFFICER WITH REGARD TO CLAIM OF EXPENDITURE, THE ASSESSING OFFIC ER CANNOT ESTIMATE THE EXPENDITURE FOR DISALLOWANCE. ACCORDING TO THE LD. COUNSEL, NO EXPENDITURE WAS INCURRED FOR EARNING THE INCOME, TH EREFORE, THERE CANNOT BE ANY DISALLOWANCE. ITA NO. 1490/12 ETC :- 3 -: 5. ON THE CONTRARY, SHRI PATHLAVATH PEERYA, LD. DEPART MENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE ADMITTE DLY INVESTED A SUM OF ` 3,17,60,644/- AND EARNED TAX FREE INCOME. HOWEVER, THE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE FOR EARNIN G THE EXEMPTED INCOME. THEREFORE, THE ASSESSING OFFICER BY APPLYI NG THE PROVISIONS OF RULE 8D OF THE INCOME TAX RULES DISALLOWED ` 11,08,832/- WHICH WAS RIGHTLY CONFIRMED BY THE CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS USED THE FUNDS OF THE COMPANY FOR EARNING THE EXEMPTED I NCOME. A PORTION OF THE FUNDS WHICH WAS USED FOR INVESTMENT WAS FROM INTEREST BEARING LOANS, THEREFORE, THE ASSESSING OFFICER OBSERVED IN THE ASSESSMENT ORDER THAT HE HAS REASON TO BELIEVE THAT THE ASSES SEE-COMPANY HAS INCURRED EXPENDITURE IN THE NATURE OF MANAGEMENT AN D ADMINISTRATION. THEREFORE, IT IS NOT CORRECT TO SAY THAT THE ASSESS ING OFFICER HAS NOT RECORDED ANY SATISFACTION. A BARE READING OF THE A SSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER WAS SATISFIED THAT THE ASSESSEE HAS INCURRED EXPENDITURE FOR EARNING THE EXEMPTED INCOM E AND ALSO FOUND THAT THE INTEREST BEARING FUNDS WERE USED FOR INVES TMENT. IN THOSE CIRCUMSTANCES, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE CLAIM OF THE ASSESSEE. ITA NO. 1490/12 ETC :- 4 -: THOUGH THE ASSESSEE CLAIMS THAT INVESTMENTS WERE M ADE IN THE SISTER CONCERNS, NO MATERIAL IS AVAILABLE ON RECORD TO IND ICATE THAT THE INVESTMENTS WERE MADE IN SISTER CONCERNS. IN THE A BSENCE OF ANY DETAILS WITH REGARD TO INVESTMENTS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS TO NECESSARI LY COMPUTE THE DISALLOWANCE BY APPLYING RULE 8D. THEREFORE, THIS T RIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A ). ACCORDINGLY THE SAME IS CONFIRMED. 7. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISALLO WANCE OF LOSS TO THE EXTENT OF ` 6,68,71,429/-. 8. SHRI S. SRIDHAR, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE LOSS SUFFERED BY THE ASSESSEE IS A SPECULATIVE LOSS. ACCORDING TO THE LD. COUNSEL, THE LOSS SUFFERED BY THE ASSESSEE WAS ON SALE OF SHARES. ACCORDING TO THE LD. COUNSEL, THE GROSS TOTAL INCOME OF THE ASSESSEE MAINLY CONSISTS OF CAPITAL GAINS AND H ENCE, EXPLANATION TO SEC. 73 OF THE ACT WOULD BE APPLICABLE TO THE FACTS , THEREFORE, THE LOSS SUFFERED BY THE ASSESSEE HAS TO BE ALLOWED. 9. REFERRING TO SEC. 43(5) OF THE ACT, THE LD. COUNSEL SUBMITTED THAT SHARES WERE HELD BY THE ASSESSEE AS INVESTMEN T AND THE SAME ITA NO. 1490/12 ETC :- 5 -: WAS SUBSEQUENTLY CONVERTED INTO STOCK-IN-TRADE. IN FACT, THE SHARES WERE DISPOSED OF BY ACTUAL DELIVERY THROUGH D-MAT ACCOUNT, THEREFORE, THE DEFINITION GIVEN FOR SPECULATIVE TRANSACTION IN SECTION 45(3) HAS NO APPLICATION TO THE FACTS OF THE CASE. ACCORDING TO THE LD. COUNSEL, THE GROSS TOTAL INCOME OF THE ASSESSEE ADMITTEDLY CONS ISTS OF CAPITAL GAINS MAINLY, THEREFORE, SECTION 73 OF THE ACT HAS NO APP LICATION AT ALL. THE ASSESSING OFFICER HAS TO APPLY THE PROVISIONS OF EX PLANATION TO SEC. 73 OF THE ACT. 10. ON THE CONTRARY, SHRI PATHLAVATH PEERYA, LD. DR SUB MITTED THAT THE ASSESSEE CLAIMS THE LOSS SUFFERED IN SALE OF SHARES CAN BE SET OFF AGAINST THE OTHER INCOME. ACCORDING TO THE LD. DR, SEC. 43(5) R.W.S 73 OF THE ACT CLEARLY SAYS THAT SPECULATION L OSS CANNOT BE SET OFF AGAINST OTHER INCOME. HOWEVER, IT CAN BE CARRIED FO RWARD AND SET OFF AGAINST FUTURE SPECULATION PROFIT. REFERRING TO SE C. 43(5) OF THE ACT, THE LD. DR SUBMITTED THAT SPECULATIVE TRANSACTION I S ONE IN WHICH A CONTRACT FOR PURCHASE OR SALE OF ANY COMMODITY INCL UDING STOCKS AND SHARES ARE PERIODICALLY AND ULTIMATELY SETTLED OTHE RWISE THAN BY ACTUAL DELIVERY. THE ASSESSEE BEFORE THIS TRIBUNAL CLAIM S THAT THE INVESTMENT WAS CONVERTED INTO STOCK-IN-TRADE AND DISPOSED OF T HROUGH D-MAT ACCOUNT, THEREFORE, THE TRANSACTION IS NOT A SPECUL ATIVE TRANSACTION WITHIN THE MEANING OF SEC. 43(5) OF THE ACT. ACCOR DING TO THE LD. DR, A ITA NO. 1490/12 ETC :- 6 -: PLAIN READING OF SEC. 43(5) AND EXPLANATION TO SEC. 73 MAKES IT CLEAR THAT EXPLANATION TO SEC. 73 IS A DEEMING FICTION GR ANTED TO TREAT THE PURCHASE AND SALE OF SHARES BY THE COMPANIES AS SPE CULATIVE IN NATURE. SEC. 73 CLEARLY INDICATES THAT INDEPENDENT OF DEFIN ITION GIVEN IN SEC. 43(5) OF THE ACT, THE LOSS IN SPECULATIVE TRANSACTI ON WILL BE SET OFF AGAINST THE SPECULATIVE PROFIT. IT CANNOT BE SET O FF AGAINST OTHER INCOME. ACCORDING TO THE LD. DR, THE ASSESSEE INC URRED A LOSS OF ` 6,68,71,429/- ON SALE OF SHARES. THEREFORE, THE LO SS IS ON ACCOUNT OF TRADING IN SHARES. IN FACT, ALL THE SHARES WERE LI STED SECURITIES IN THE STOCK EXCHANGE. REFERRING TO SECTION 73 OF THE ACT , THE LD. DR SUBMITTED THAT THE ASSESSEE IS MAINLY ENGAGED IN TH E BUSINESS OF LOGISTICS, WIND ENERGY GENERATION, MANUFACTURE AND EXPORT OF QUARTZ AND TRADING OF COAL. THE ASSESSEE IS ALSO ENGAGED IN CLEARING AND FORWARDING AGENT IN PART. ACCORDING TO THE LD. DR, THE LONG TERM CAPITAL GAINS HAS ARISEN DURING THE YEAR UNDER CONS IDERATION WHICH ARE PECULIAR FOR THIS ASSESSMENT YEAR UNDER CONSIDERATI ON. THE MAIN BUSINESS OF THE ASSESSEE IS ONLY FROM LOGISTIC AND ENERGY GENERATION, THEREFORE, MERELY BECAUSE THE ASSESSEE HAD SUFFER ED LOSS DURING THE YEAR UNDER CONSIDERATION BECAUSE OF THE PECULIAR CI RCUMSTANCES, THAT CANNOT BE A REASON TO CLAIM SET OFF OF THE LOSS SUF FERED IN SALE OF SHARES AGAINST THE CAPITAL GAINS. THE INCOME FROM THE PRINCIPAL ITA NO. 1490/12 ETC :- 7 -: BUSINESS OF THE ASSESSEE WAS NOT CHARGEABLE UNDER THE HEAD INTEREST ON SECURITIES OR INCOME FROM HOUSE PROPERTY OR CAPI TAL GAINS ETC. THEREFORE, SEC. 73 IS SQUARELY APPLICABLE TO THE FA CTS OF THE CASE. THEREFORE, THE ASSESSEE CANNOT CLAIM ANY SET OFF. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSEE IS NOT IN THE BUSINESS OF BANKING OR GRANTING LOANS OR ADVANCES, THEREFORE, THE ASSESSE E CANNOT CLAIM ANY SET OFF OF THE LOSS SUFFERED IN SALE OF SHARES. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIONS OF SEC. 43(5) WHICH REA DS AS FOLLOWS: (5) 'SPECULATIVE TRANSACTION' MEANS A TRANSACTION IN WHICH A CONTRACT FOR THE PURCHASE OR SALE OF ANY COMMODITY, INCLUDING STOCKS AND SHARES, IS PERIODICALLY OR ULTIMATELY SE TTLED OTHERWISE THAN BY THE ACTUAL DELIVERY OR TRANSFER OF THE COMM ODITY OR SCRIPS: PROVIDED THAT FOR THE PURPOSES OF THIS CLAUSE-- (A) A CONTRACT IN RESPECT OF RAW MATERIALS OR MERCH ANDISE ENTERED INTO BY A PERSON IN THE COURSE OF HIS MANUFACTURING OR MERCHANTING BUSINESS TO GUARD AGAINST LOSS THROUGH FUTURE PRICE FLUCTUATIONS IN RESPECT OF HIS CONTRACTS FOR ACTUAL DELIVERY OF GOO DS MANUFACTURED BY HIM OR MERCHANDISE SOLD BY HIM ; OR (B) A CONTRACT IN RESPECT OF STOCKS AND SHARES ENTE RED INTO BY A DEALER OR INVESTOR THEREIN TO GUARD AGAINST LOSS IN HIS HOLDINGS OF STOCKS AND SHARES THROUGH PRICE FLUCTUATIONS ; OR (C) A CONTRACT ENTERED INTO BY A MEMBER OF A FORWAR D MARKET OR A STOCK EXCHANGE IN THE COURSE OF ANY TRANSACTION IN THE NATURE OF JOBBING OR ARBITRAGE TO GUARD AGAINST LOSS WHICH MA Y ARISE IN THE ORDINARY COURSE OF HIS BUSINESS AS SUCH MEMBER ; OR (D) AN ELIGIBLE TRANSACTION IN RESPECT OF TRADING I N DERIVATIVES REFERRED TO IN CLAUSE (AC) OF SECTION 2 OF THE SECU RITIES CONTRACTS ITA NO. 1490/12 ETC :- 8 -: (REGULATION) ACT, 1956 (42 OF 1956), CARRIED OUT IN A RECOGNISED STOCK EXCHANGE ; OR (E) AN ELIGIBLE TRANSACTION IN RESPECT OF TRADING I N COMMODITY DERIVATIVES CARRIED OUT IN A RECOGNISED ASSOCIATIO N, WHICH IS CHARGEABLE TO COMMODITIES TRANSACTION TAX UNDER CHA PTER VII OF THE FINANCE ACT, 2013 (17 OF 2013), SHALL NOT BE DEEMED TO BE A SPECULATIVE TRANSACTION ; 12. IN VIEW OF THIS, IF ANY TRANSACTION WAS SETTLED PER IODICALLY OR ULTIMATELY OTHERWISE THAN BY ACTUAL DELIVERY HAS TO BE CONSTRUED AS SPECULATIVE TRANSACTION. PROVISO(B) TO SEC. 43(5) CLEARLY PROVIDES THAT A CONTRACT IN RESPECT OF STOCK AND SHARES ENTERED IN TO BY AN INVESTOR TO GUARD AGAINST LOSS IN HIS HOLDINGS OF STOCKS AND SH ARES THROUGH PRICE FLUCTUATIONS SHALL NOT BE DEEMED TO BE A SPECULATIV E TRANSACTION. IN THE CASE BEFORE US, THE ASSESSEE CLAIMS THAT THE S HARES AND STOCKS WERE TREATED AS INVESTMENT AT THE INITIAL STAGE. S UBSEQUENTLY, THE SAME WAS CONVERTED INTO STOCK-IN-TRADE AND THE SAME WAS SOLD. THEREFORE, WE HAVE TO EXAMINE WHETHER THE ASSESSEE CONVERTED THE INVESTMENT INTO STOCK-IN-TRADE IN ORDER TO GUARD AG AINST THE POSSIBLE LOSSES THAT MAY BE SUFFERED OR TO ENGAGE ITSELF IN THE BUSINESS OF SHARE TRADING AS A DEALER. IN EITHER WAY, PROVISO(B) TO SEC. 43(5) WOULD COME INTO OPERATION. THIS ASPECT WAS NOT EXAMINED BY BOTH THE AUTHORITIES BELOW. 13. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIONS OF SEC. 73 OF THE ACT WHICH READS AS FOLLOWS: ITA NO. 1490/12 ETC :- 9 -: 73. LOSSES IN SPECULATION BUSINESS (1) ANY LOSS, COMPUTED IN RESPECT OF A SPECULATION BUSINESS CARRIED ON BY THE ASSESSEE, SHALL NOT BE SET OFF EXCEPT AGAINST P ROFITS AND GAINS, IF ANY, OF ANOTHER SPECULATION BUSINESS. (2) WHERE FOR ANY ASSESSMENT YEAR ANY LOSS COMPUTED IN RESPECT OF A BUSINESS HAS NOT BEEN WHOLLY SET OFF UNDER SUB-SECT ION (1), SO MUCH OF THE LOSS AS IS NOT SO SET OFF OR THE WHOLE LOSS WHE RE THE ASSESSEE HAD NO INCOME FROM ANY OTHER SPECULATION BUSINESS, SHALL, SUBJECT TO THE OTHER PROVISIONS OF THIS CHAPTER, BE CARRIED FORWARD TO T HE FOLLOWING ASSESSMENT YEAR, AND (I) IT SHALL BE SET OFF AGAINST THE PROFITS AND GAI NS, IF ANY, OF ANY SPECULATION BUSINESS CARRIED ON BY HIM ASSESSABLE F OR THAT ASSESSMENT YEAR ; AND (II) IF THE LOSS CANNOT BE WHOLLY SO SET OFF, THE A MOUNT OF LOSS NOT SO SET OFF SHALL BE CARRIED FORWARD TO THE FOLLOWING ASSES SMENT YEAR AND SO ON. (3) IN RESPECT OF ALLOWANCE ON ACCOUNT OF DEPRECIAT ION OR CAPITAL ON SCIENTIFIC RESEARCH, THE PROVISIONS OF SUB-SECTION (2) OF SECTION 72 SHALL APPLY IN RELATION TO SPECULATION BUSINESS AS THEY A PPLY IN RELATION TO ANY OTHER BUSINESS. (4) NO LOSS SHALL BE CARRIED FORWARD UNDER THIS SEC TION FOR MORE THAN FOUR ASSESSMENT YEARS IMMEDIATELY SUCCEEDING THE ASSESSM ENT YEAR FOR WHICH THE LOSS WAS FIRST COMPUTED. EXPLANATION WHERE ANY PART OF THE BUSINESS OF A COMPANY (OTHER THAN A COMPANY WHOSE GROSS TOTAL INCOME CONSISTS MAINLY OF INCOME WHICH IS CHARGEABLE UNDER THE HEADS INTEREST ON SECURITIES , INCOME FROM HOUSE PROPERTY, CAPITAL GAINS AND INCOME FROM OTHER S OURCES OR A COMPANY THE PRINCIPAL BUSINESS OF WHICH IS THE BUSINESS OF TRADING IN SHARES OR BANKING OR THE GRANTING OF LOANS AND ADVANCES) CON SISTS IN THE PURCHASE AND SALE OF SHARES OF OTHER COMPANIES, SUCH COMPANY SHALL, FOR THE PURPOSES OF THIS SECTION, BE DEEMED TO BE CARRYING ON A SPECULATION BUSINESS TO THE EXTENT TO WHICH THE BUSINESS CONSIS TS OF THE PURCHASE AND SALE OF SUCH SHARES. 14. EXPLANATION TO SEC. 73 CLEARLY SAYS THAT WHEN THE B USINESS OF THE COMPANY OTHER THAN A COMPANY WHOSE GROSS TOTAL INCOME CONSIST OF INCOME UNDER THE HEAD INTEREST ON SECURITIES, IN COME FROM HOUSE PROPERTY, CAPITAL GAINS AND INCOME FROM OTHER SOURC ES OR A COMPANY, THE PRINCIPAL BUSINESS IS OF TRADING IN SHARES AND BANKING OR GRANTING ITA NO. 1490/12 ETC :- 10 -: LOAN OR ADVANCE, HAS TO BE CONSIDERED AS CARRYING O N SPECULATION BUSINESS. IN THE CASE BEFORE US, ADMITTEDLY, DURIN G THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS CONVERTED THE INVES TMENT IN SHARES AND STOCKS AS STOCK-IN-TRADE, THEREFORE, THE BUSI NESS OF THE COMPANY IS PURCHASE AND SALE OF SHARES AS PROVIDED IN EXPLA NATION OF SEC. 73 OF THE ACT. THE CIT(A) OBSERVED IN THE IMPUGNED ORDER THAT THE CAPITAL GAINS ARISING DURING THE YEAR IS BECAUSE OF A PECUL IAR REASON FOR THIS ASSESSMENT YEAR. IT IS NOT KNOWN WHAT IS THE PECUL IAR REASON WHICH WAS REFERRED TO BY THE CIT(A). IN VIEW OF THE ABOV E FACTUAL SITUATION, IF THE ASSESSEE CONVERTED THE INVESTMENT IN STOCKS AND SHARES AS STOCK-IN-TRADE, THE ASSESSEES TRANSACTION ON SALE OF SHARES CANNOT BE CONSTRUED AS SPECULATIVE TRANSACTION WITHIN THE PRO VISO (B) TO SEC. 43(5) OF THE ACT. THIS TRIBUNAL IS OF THE CONSIDE RED OPINION THAT IN SUCH A SITUATION, THE MATTER NEEDS TO BE REEXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY, THE ORDERS OF THE LOWER AUTH ORITIES ARE SET ASIDE AND THE ISSUE OF CLAIM OF LOSS IN SALE OF SHARES IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICE R SHALL REEXAMINE THE MATTER AFRESH IN THE LIGHT OF PROVISO(B) TO SEC.43( 5) OF THE ACT AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW A FTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. ITA NO. 1490/12 ETC :- 11 -: 15. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISALLO WANCE OF CLOSING WORK-IN-PROGRESS. 16. SHRI S. SRIDHAR, LD. COUNSEL SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS DISCLOSED CL OSING WORK-IN- PROGRESS AT ` 31,77,57,705/-. HOWEVER, THE ASSESSING OFFICER RECOMPUTED THE SAME AT ` 36,38,22,705/-. THE ASSESSING OFFICER FOUND THAT THERE WERE NO SALES OR CONTRACT RECEIPTS REPORTED FROM THE CONSTRUCTION DIVISION. ACCORDING TO THE LD. COUNSE L, THE ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH CHENNAI PORT TRUST F OR DESIGN, MANUFACTURE, SUPPLY , INSTALLATION, OPERATION AND M AINTENANCE OF SEMI- MECHANIZED COAL HANDLING SYSTEM FOR ` 42.83 CRORES. THE MAJOR CONTRACT VALUE GOES TO PURCHASE OF STEEL AND MECHAN ICAL EQUIPMENTS, THEREFORE, BY FOLLOWING ACCOUNTING STANDARD-7, THE ASSESSEE RECOGNIZED THE LOSS TO THE EXTENT OF ` 4,60,65,000/-. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE AND T HE SAME WAS ADDED TO THE TOTAL INCOME. THE ASSESSING OFFICER HAS ALS O RECOMPUTED THE WORK-IN-PROGRESS AT ` 36,38,22,705/-. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE IS FOLLOWING PERCENTAGE COMPLETION ME THOD AS RECOGNIZED IN AS-7 THEREFORE, THE CIT(A) OUGHT TO H AVE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. ITA NO. 1490/12 ETC :- 12 -: 17. ON THE CONTRARY, SHRI PATHLAVATH PEERYA, LD. DR SUB MITTED THAT THE CIT(A), AFTER CONSIDERING THE CLAIM OF THE ASSESSEE FOUND THAT WHILE PREPARING THE FINANCIAL ACCOUNTS AND RECOGNIZ ING THE LOSS SUFFERED DUE TO VARIOUS FACTORS INCLUDING ESCALATIO N OF COST OF MATERIAL IN DETERMINING ALL THE FINANCIAL RESULT OF THE ONG OING CONTRACT WAS JUSTIFIABLE AND IN ACCORDANCE WITH THE ACCEPTED ACC OUNTING PRINCIPLES. ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER HAS TO VERIFY FROM THE RECORDS THE STAGE OF COMPLETION OF THE PROJECT AND ALLOW THE LOSS PROPORTIONATELY BASED ON THE STAGE OF COMPLETION O F THE WORK. IN VIEW OF THE DIRECTION OF THE CIT(A), THE ASSESSEE MAY NOT HAVE ANY GRIEVANCE AT ALL. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. TH E ASSESSEE CLAIMS THAT IT WAS FOLLOWING PERCENTAGE COMPLETION METHOD AS PER AS-7 FOR VALUING THE CLOSING WORK-IN-PROGRESS. IF THE ASSE SSEE WAS FOLLOWING PERCENTAGE COMPLETION METHOD AS PER AS-7, NOTHING W RONG IN VERIFYING THE COMPLETION OF THE WORK AS DIRECTED BY THE CIT(A ). THEREFORE, AS RIGHTLY SUBMITTED BY THE LD. DR, THE ASSESSEE CANN OT HAVE ANY GRIEVANCE AT ALL IN VERIFYING THE STAGES OF COMPLET ION OF THE WORK. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONF IRMED. ITA NO. 1490/12 ETC :- 13 -: 19. NOW COMING TO THE REVENUES APPEALS FOR ASSESSMENT YEARS AND 2008-09 AND 2009-10, THE FIRST ISSUE IS DEDUCTI ON U/S 10B OF THE ACT. 20. SHRI PATHLAVATH PEERYA, THE LD. DR SUBMITTED THAT W HILE COMPUTING THE ELIGIBLE PROFIT FOR DEDUCTION U/S 10 B OF THE ACT, THE CIT(A) DIRECTED THE ASSESSING OFFICER TO EXCLUDE FR EIGHT ON EXPORT AND INSURANCE BOTH FROM THE EXPORT TURNOVER AND TOTAL T URNOVER. ACCORDING TO THE LD. DR, THE REVENUE HAS FILED APPEAL AGAINST THE DECISION OF THE SPECIAL BENCH IN ITO VS SAKSOFT LTD., 121 TTJ 865, AND IT IS PENDING FOR FINAL DISPOSAL. 21. WE HEARD SHRI S. SRIDHAR, LD. COUNSEL FOR THE ASSES SEE ALSO. 22. ADMITTEDLY, THE CIT(A) FOLLOWED THE ORDER OF THE SP ECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF SAKSOFT LTD.( SUPRA). THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE EXPO RT TURNOVER AND TOTAL TURNOVER SHALL BE OF THE SAME FIGURE. IN OTHER WOR DS, THE DENOMINATOR AND NUMERATOR SHALL CONSIST OF THE SAME ITEM. IF TH E FREIGHT ON EXPORT AND INSURANCE WERE EXCLUDED FROM THE EXPORT TURNOVE R, THE SAME HAS ALSO TO BE EXCLUDED FROM THE TOTAL TURNOVER. THERE FORE, THE CIT(A) HAS RIGHTLY DIRECTED THE ASSESSING OFFICER TO RECOMPUT E THE DEDUCTION BY EXCLUDING FREIGHT ON EXPORT AND INSURANCE BOTH FROM EXPORT TURNOVER AND TOTAL TURNOVER. ACCORDINGLY, THE ORDER OF THE CIT(A) IS CONFIRMED. ITA NO. 1490/12 ETC :- 14 -: 23. THE SECOND ISSUE FOR ASSESSMENT YEARS 2008-09 AND 2 009-10 IS WITH REGARD TO DISALLOWANCE OF ANTICIPATED LOSS ON ACCOUNT OF ADJUSTMENT IN CLOSING WORK-IN-PROGRESS. 24. SHRI PATHLAVATH PEERYA, LD. DR SUBMITTED THAT FOR A SSESSMENT YEAR 2009-10, THE ANTICIPATED LOSS ON ACCOUNT OF ADJUSTMENT OF WORK- IN-PROGRESS WAS RECOGNIZED BY THE ASSESSEE AS PER AS-7 TO THE EXTENT OF ` 4,60,65,000/-. ACCORDING TO THE LD. DR, NO SALES OR CONTRACT RECEIPTS WAS REPORTED DURING THE YEAR UNDER CONSIDE RATION. THE CLAIM OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT IT HAD ENTERED INTO AN AGREEMENT WITH CHENNAI PORT TRUST FOR DESIG N, MANUFACTURE, SUPPLY, INSTALLATION, OPERATION AND MAINTENANCE OF SEMI-MECHANIZED COAL HANDLING SYSTEM. THE MAJOR CONTRACT VALUE, AC CORDING TO THE ASSESSEE, GOES TO PURCHASE OF STEEL AND MECHANICAL EQUIPMENTS. ACCORDING TO THE LD. DR, SINCE THERE WAS NO SALES O R CONTRACT RECEIPT DURING THE YEAR UNDER CONSIDERATION, THE ANTICIPATE D LOSS TO THE EXTENT OF ` 4,60,65,000/- CANNOT BE ADJUSTED IN THE CLOSING WO RK-IN-PROGRESS. 25. ON THE CONTRARY, S.SRIDHAR, LD. COUNSEL FOR THE ASS ESSEE SUBMITTED THAT VALUATION OF CLOSING STOCK WAS BASED ON PERCENTAGE COMPLETION METHOD AS PER AS-7. THE CIT(A), FOR THE ASSESSMENT YEAR 2008-09, FOUND THAT THE ANTICIPATED LOSS IN VALUATI ON OF CLOSING STOCK ITA NO. 1490/12 ETC :- 15 -: HAS TO BE ALLOWED. THE CIT(A) HAS SIMPLY FOLLOWED HIS ORDER FOR ASSESSMENT YEAR 2008-09. 26. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH THE ORDER OF THE CIT(A) FOR ASSESSMENT YEAR 2008-09. THE CIT(A) BY PLACING HIS RELIANCE ON THE CONSTITUTIONA L BENCH OF THE APEX COURT IN THE CASE OF PADMASUNDARA RAO VS STATE OF T AMIL NADU, 255 ITR 147, FOUND THAT ONE ADDITIONAL OR DIFFERENT FAC T MAY MAKE A WORLD OF DIFFERENCE BETWEEN THE CONCLUSIONS IN TWO CASES. AFTER CALLING FOR THE REMAND REPORT FROM THE ASSESSING OFFICER, THE C IT(A) FURTHER FOUND THAT THE LIABILITY INCURRED BY THE ASSESSEE DURIN G THE YEAR UNDER CONSIDERATION WAS NOT DENIED BY THE ASSESSING OFFIC ER. THE CIT(A) FURTHER FOUND THAT THE ANTICIPATED LOSS ON ACCOUNT OF VALUATION OF CLOSING STOCK CAN BE TAKEN IN TO ACCOUNT AFTER CONS IDERING THE ANTICIPATED PROFIT IN THE SHAPE OF APPRECIATED VALU E OF THE CLOSING STOCK WHICH WAS NOT BROUGHT INTO ACCOUNT. AS A PRUDENT T RADER, THE ASSESSEE CAN ALWAYS TAKE CARE TO SHOW INCREASED PR OFIT BEFORE ITS ACTUAL REALIZATION. ACCORDINGLY, THE CIT(A) DIRECT ED THE ASSESSING OFFICER TO VERIFY THE STAGE OF THE COMPLETION OF TH E PROJECT AND ALLOW THE LOSS PROPORTIONATELY BASED ON THE STAGE OF COMP LETION. WHEN THE ASSESSEE IS FOLLOWING PROJECT COMPLETION METHOD, TH E CIT(A) HAS RIGHTLY ITA NO. 1490/12 ETC :- 16 -: DIRECTED THE ASSESSING OFFICER TO VERIFY THE STAGE OF THE PROJECT COMPLETED AS ON 31.3.2009 AND ALLOW THE LOSS PROPOR TIONATELY BASED ON THE STAGE OF COMPLETION. THEREFORE, THIS TRIBUN AL DO FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) AN D ACCORDINGLY, THE SAME IS CONFIRMED. 27. THE REVENUE HAS RAISED ONE MORE GROUND FOR ASSESSME NT YEAR 2009-10 WITH REGARD TO DEDUCTION U/S 80IA OF THE ACT. 28. THE ASSESSEE CLAIMED DEPRECIATION ON THE WINDMILL FOR EARLIER ASSESSMENT YEAR WHICH WAS ALREADY SET OFF A GAINST THE PROFIT FROM OTHER BUSINESS. THE CIT(A), BY PLACING RELIAN CE ON THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASW AMY SPINNING MILLS P. LTD VS ACIT, 340 ITR 477, ALLOWED THE CLAI M OF THE ASSESSEE. 29. WE HEARD SHRI S. SRIDHAR, LD. COUNSEL FOR THE ASSES SEE ALSO. 30. THE CBDT IN ITS LATEST CIRCULAR HAS INSTRUCTED ITS OFFICERS NOT TO FILE ANY APPEAL WHEREVER THE ISSUE IS COVERED BY THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS P. LTD VS ACIT(SUPRA). IN THIS CASE, IT IS NOT IN DISPUTE THAT THE ISSUE RAISED BY THE REVENUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ABOVE CITED JUDGMENT OF THE MADRAS HIGH COURT. TH EREFORE, THIS ITA NO. 1490/12 ETC :- 17 -: TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE CIT(A) AND ACCORDINGLY, THE SAME IS CONFIRMED. 31. NOW, COMING TO THE ASSESSEES APPEAL I.T.A.NO. 813/MDS/2013 FOR ASSESSMENT YEAR 2008-09 CHALLENGIN G THE ORDER OF THE ADMINISTRATIVE COMMISSIONER PASSED U/S 263 OF THE ACT. 32. SHRI S. SRIDHAR, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY A LLOWING THE TRADING LOSS OF ` 5.16 CRORES. HOWEVER, THE CIT FOUND THAT DURING T HE YEAR UNDER CONSIDERATION THE ASSESSEE PURCHASED 39 8750 METRIC TONS OF COAL FOR A VALUE OF ` 124,34,22,593/- AND SOLD THE SAME TO M/S CHETTINAD CEMENT CORPORATION LTD FOR ` 126,88,26,549/-. THE LD. COUNSEL FURTHER SUBMITTED THAT DUE TO POOR QUALITY OF COAL AND LESSER CALORIFIC VALUE, M/S CHETTINAD CEMENT CORPORATION L TD. RAISED A DEBIT NOTE FOR ` 7,69,91,989/- . THEREFORE, THE TRANSACTION ON SAL E OF COAL TO M/S CHETTINAD CEMENT CORPORATION LTD. RESULTED IN A LOSS OF ` 5.16 CRORES. THIS WAS ALLOWED BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT. HOWEVER, THE CIT FOUND THAT THE DE BIT NOTE WAS RAISED BY A LOCAL BUYER ON THE BASIS OF THE MUTUAL DISCUSSION AND THE ASSESSEE HAS NOT TAKEN ANY STEP TO RECOVER THE AMOU NT DUE TO SHORTFALL IN QUALITY FROM THE SUPPLIER. REFERRING TO THE MOD E OF PAYMENT MADE ITA NO. 1490/12 ETC :- 18 -: BY THE ASSESSEE THROUGH LETTER OF CREDIT, THE CIT FOUND THAT THERE IS A PROVISION FOR PENALTY IN THE AGREEMENT WHENEVER THE QUALITY VARIES FROM THE AGREED VALUE. THE ASSESSEE HAS NOT ENFORC ED THE AGREEMENT AND RECOVERED THE AMOUNT FROM THE SUPPLIER. REFERR ING TO THE RECOVERY MADE BY THE ASSESSEE TO THE EXTENT OF ` 1.27 CRORES, THE CIT FOUND THAT THE DEBIT NOTE CLAIMED BY THE M/S CHETTI NAD CEMENT CORPORATION LTD. WAS ACCEPTED BY THE ASSESSEE AT ` 7.69 CRORES. HOWEVER, WHAT WAS RECOVERED WAS ONLY 1.27 CRORES. THEREFORE, THE NET TRADING LOSS OF ` 5.16 CRORES WAS NOT RECONCILED. HENCE, IT HAS TO BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 33. REFERRING TO THE DEPRECIATION ON THE WINDMILL, THE LD. COUNSEL SUBMITTED THAT THE DEPRECIATION FOR THE CURRENT YEA R BEING THE BROUGHT FORWARD WDV, THE ASSESSING OFFICER WAS DIRECTED TO VERIFY THE SAME. ACCORDING TO THE LD. COUNSEL, IN VIEW OF THE JUDGME NT OF THE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS P. LTD VS ACIT, 340 ITR 477, THE BROUGHT FORWARD DEPRECIATION HAS TO BE ALLOWED. THEREFORE, THE CIT IS NOT JUSTIFIED IN RE VISING THE ORDER OF THE ASSESSING OFFICER. ITA NO. 1490/12 ETC :- 19 -: 34. ON THE CONTRARY, SHRI PATHLAVATH PEERYA, LD. DR SUB MITTED THAT THE ASSESSEE CLAIMED LOSS TO THE EXTENT OF ` 5.16 CRORES ON THE SALE OF COAL MADE TO M/S CHETTINAD CEMENT CORPORATI ON LTD. THE TRADING LOSS WAS SAID TO BE DUE TO POOR QUALITY OF COAL AND LESSER CALORIFIC VALUE. THE AGREEMENT BETWEEN THE SUPPLIE R AND THE ASSESSEE- COMPANY WAS NOT ENFORCED IN RECOVERING THE DEFICIT. THE ASSESSEE CLAIMS THAT WHAT WAS RECOVERED FROM THE SUPPLIER IS ONLY 1.27 CRORES AS AGAINST THE ACTUAL LOSS OF ` 7.69 CRORES. SINCE THE ASSESSEE COULD NOT RECONCILE THE NET ACCOUNTING TRADING LOSS TO THE EX TENT OF ` 5.16 CRORES, THE CIT HAS RIGHTLY FOUND THAT PROPER VERIFICATION IS REQUIRED WITH REGARD TO QUANTIFICATION OF LOSS. 35. REFERRING TO THE DEPRECIATION ON THE WINDMILL, THE LD. DR SUBMITTED THAT SINCE THE DEPRECIATION FOR THE CURRE NT YEAR BEING THE BROUGHT FORWARD WDV, THE ASSESSING OFFICER NEEDS TO VERIFY THE SAME. THEREFORE, THE CIT HAS RIGHTLY DIRECTED THE ASSESSI NG OFFICER TO VERIFY THE SAME. 36. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE, ADMITTEDLY, ENGAGED IN THE BUSINESS OF LOGISTIC SER VICE. IN THE COURSE OF ITS BUSINESS ACTIVITY, THE ASSESSEE PURCHASED C OAL AND SOLD THE ITA NO. 1490/12 ETC :- 20 -: SAME TO M/S CHETTINAD CEMENT CORPORATION LTD. DUE TO POOR QUALITY OF COAL, M/S CHETTINAD CEMENT CORPORATION LTD. RAISED A DEBIT NOTE TO THE EXTENT OF ` 7,69,91989/-. THIS RESULTED IN THE LOSS OF ` 5.16 CRORES. AS PER THE AGREEMENT, THE ASSESSEE RECOVERED ` 1.27 CRORES FROM THE SUPPLIER FOR THE POOR QUALITY OF COAL. THE REMAINI NG AMOUNT WAS NOT RECOVERED FROM THE SUPPLIER. THE FACT REMAINS THAT THE ASSESSEE HAS SUFFERED A LOSS OF ` 5.16 CRORES IN THE COURSE OF ITS BUSINESS ACTIVITY ON PURCHASE AND SALE OF COAL TO M/S CHETTINAD CEMENT C ORPORATION LTD. MERELY BECAUSE THERE WAS AN AGREEMENT TO RECOVER TH E SAME FROM THE SUPPLIER, THE SAME CANNOT BE REASON TO DISALLOW TH E CLAIM ESPECIALLY WHEN THE ASSESSEE WAS ABLE TO RECOVER ` 1.27 CRORES. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT IS NOT JUSTIFIED IN REVISING THE ORDER OF THE ASSESSING OFFICER. 37. NOW COMING TO THE DEPRECIATION ON THE WINDMILL, IN VIEW OF THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE O F VELAYUDHASWAMY SPINNING MILLS P. LTD(SUPRA), THE A SSESSEE IS ELIGIBLE FOR DEPRECIATION EVEN THOUGH IT WAS SET OFF IN THE EARLIER ASSESSMENT YEAR. IN THIS CASE, THE ASSESSEE CLAIMS THAT DEP RECIATION WAS CARRIED FORWARD FROM THE EARLIER ASSESSMENT YEAR. EVEN THO UGH IT IS CARRIED FORWARD, IT HAS TO BE ALLOWED ON THE WDV. THEREFOR E, THIS TRIBUNAL IS ITA NO. 1490/12 ETC :- 21 -: OF THE CONSIDERED OPINION THAT THE CIT IS NOT CORRE CT IN REVISING THE ORDER OF THE ASSESSING OFFICER. 38. IN VIEW OF THE ABOVE DISCUSSION, THE ORDER OF THE CIT IS SET ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 39. NOW COMING TO THE ASSESSEE S APPEAL FOR ASSESSME NT YEAR 2008-09, THE ONLY ISSUE ARISES FOR CONSIDERATION IS DISALLOWANCE OF REVENUE U/S 14A OF THE ACT. 40. SHRI S. SRIDHAR, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THATS THE ASSESSING OFFICER MADE ADDITION OF ` 30,73,194/- U/S 14A OF THE ACT. THE ASSESSING OFFICER FOUND THAT THE ASSESSE E INVESTED ` 62,69,48,101/- FOR EARNING THE EXEMPTED INCOME. AC CORDING TO THE LD. COUNSEL, THE INVESTMENT WAS MADE OUT OF THE NON-INT EREST BEARING FUNDS AVAILABLE WITH THE ASSESSEE. SINCE THE INVE STMENT WAS MADE FROM THE ASSESSEES OWN FUNDS, ACCORDING TO THE LD . COUNSEL, THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING THE DI SALLOWANCE U/S 14A. 41. ON THE CONTRARY, SHRI PATHLAVATH PEERYA, LD. DR SUB MITTED THAT THE ASSESSEE UTILIZED THE FUNDS OF THE COMPAN Y FOR MAKING INVESTMENT AND A PORTION OF THE FUND USED FOR INVES TMENT WAS FROM AND OUT OF THE INTEREST BEARING FUNDS. THEREFORE, THE PROPORTIONATE COST OF INTEREST PERTAINING TO INVESTMENT HAS TO BE NECESSARILY ITA NO. 1490/12 ETC :- 22 -: DISALLOWED. THE ASSESSING OFFICER, THEREFORE, HAS RIGHTLY FOLLOWED RULE 8D OF THE INCOME TAX RULES, FOR MAKING THE DISALLOW ANCE. 42. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMS THAT OWN FUNDS WERE USED FOR MAKING INVESTMENT FOR EARNING THE EXEMPTED INCOME. THE ASSESSING OFFICER FOUND THAT A PORTION OF THE FUNDS WAS INVESTED FROM AND OUT OF INTEREST BEARING LOAN. THE FACT REMAINS THAT THE ASSESSEE BORROWED LOAN FOR THE PU RPOSE OF BUSINESS, THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT RULE 8D IS SQUARELY APPLICABLE FOR THE PURPOSE OF ESTIMATING T HE EXPENDITURE. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS RIGHTLY APPLIED RULE 8D FOR COMPUTING THE EXPEN DITURE INCURRED FOR EARNING THE EXEMPTED INCOME. THEREFORE, THIS TRIBU NAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. 43. IN THE RESULT, THE ASSESSEES APPEAL FOR ASSESSMEN T YEAR 2008-09 IS DISMISSED. 44. TO SUMMARIZE, THE REVENUES APPEALS I.T.A.NO.1495/M DS/ 2012 AND 946/MDS/2013 ARE DISMISSED. ASSESSEES A PPEAL I.T.A.NO. 1490/MDS/2012 IS DISMISSED, I.T.A.NO.813/MDS/2013 I S ALLOWED ITA NO. 1490/12 ETC :- 23 -: WHEREAS I.T.A.NO.632/MDS/2013 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST JULY, 2016, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ) ) (N.R.S. GANESAN) / JUDICIAL MEMBER / CHENNAI ! / DATED: 1 ST JULY, 2016 RD !' # $% &% / COPY TO: 1 . '( / APPELLANT 4. ) / CIT 2. #*'( / RESPONDENT 5. %+, # - / DR 3. ) () / CIT(A) 6. ,/ 0 / GF